Dismissed

FPA-PMLA-1539/GHY/2016 of Shri Charanjit Singh Gandhi v. The Joint Director Directorate of Enforcement, Guwahati

ATFP13 Jan 2025FPA-PMLA-1539/GHY/2016

Case brief

AI extract

What is this about?

Tribunal dismissed appellants' appeal against confirmation of provisional attachment order. Bench reaffirmed that properties acquired prior to predicate offence are attachable as equivalent value when proceeds vanish, and held attachment is civil, not hit by anti-retroactivity bar.

What did the court decide?

Appeals dismissed; provisional attachment of properties confirmed; pending applications disposed of.

FPA-PMLA-1539/GHY/2016 of Shri Charanjit Singh Gandhi Vs. The… — Money Laundering | ATFP (2025)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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(1) MP-PMLA-2884/GHY/2016 (A.D.) FPA-PMLA-1539/GHY/2016 Shri Charanjit Singh Gandhi … Appellant Versus The Joint Director Directorate of Enforcement, Guwahati … Respondent (2) MP-PMLA-2886/GHY/2016 (Exem.) MP-PMLA-2888/GHY/2016 (A.D.) FPA-PMLA-1540/GHY/2016 Shri Ranbir Singh Gandhi … Appellant Versus The Joint Director Directorate of Enforcement, Guwahati & Anr. … Respondent

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Advocates/Authorized Representatives who appeared

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For the appellant	: Mr. Harshvardhan Pandey, Adv.
For the respondent (ED)	: Ms. Nidhi Raman, Adv. Mr. Akash Mishra, Adv.
For the respondent No. 2	: Mr. Premtosh Mishra, Adv. Mr. Vasovdev Sharma, Adv.
CORAM	Mr. Manish Vasisth, Adv.
SHRI V. ANANDARAJAN	: MEMBER

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ORDER
13.01.2025

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The present appeal is filed by the Appellants under section 26 of the PMLA, 2002 against the order of the Ld. Adjudicating Authority (AA) dated16.09.2016, confirming the Provisional Attachment Order (PAO) dated 31.03.2016 in Original Complaint (OC) No. 585/2016, whereby the following properties of the Appellants herein were attached:

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FPA-PMLA-1539-1540/GHY/2016

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SI. No.	Name of the Owner	Details of the Property	Value of the Property in Rs.
	Ranbir	Sale Deed No. 03AA552880.	32,50,000/-
1.	Singh	Schedule: Plot No. 113 on
	Gandhi	Akashneem Marg Road measuring 420m²situated in residential colony known as DLF Qutab Enclave, Phase II, Tehsil and Distt. Gurgaon, Haryana , butted and bounded as under- East: Plot No. Akashneem Marg-12 West: Plot no. Akshneem Marg-114 North: Plot No. P-10/06; South: Road at Rajouri Garden, N. Delhi.
	Charanjit	Sale No. 02DDJ6J254, Plot	4,25,000/-
2.	Singh Gandhi	no. 10 in Block-Z, land measuring 99.7 sq.yards situated in area of village Darapur and the colony knowng as Rajouri Garden, N. Delhi and is bounded by: East: Road 40‟ wide West: Remaining portion of the
		said property North: remaining portion of the
		said property South: Remaining portion of the said property (Mortgaged with Canara
		bank, Vikaspuri branch, N. Delhi)

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Sale Deed No. 02DDJ6J252	4,25,000/-
, Plot No.10 in Block -Z
measuring 99.7 sq.yards
situatied in the area of
Basai Darapur and the
colony known as Rajouri
Garden, N.Delhi and is
bounded as under-East:
Road of 40‟ wide West:
remaining portion of the
said property North:
remaining portion of the
said property South:
Property no. Z-8
(Mortgaged with Canara
Ban, Vikapuri Branch, N.
Delhi)

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Facts in brief:-

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2. The relevant facts briefly are that the Head of Branch, Central Bureau of Investigation, ACB, Shillong, under letter No. DPSHG2012/341/ RC1A2011SHG dated 23.01.2013, forwarded a copy of Charge Sheet No. 08 dated 21.01.2011 filed against Shri Depolal Hojai, Shri Dabiruz Jaman, Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi in the Court of Special Judge, CBI, Assam, Guwahati for offences punishable u/s 120-B, 409 of IPC and Section 13(2) r.w.13(1)(d) of the Prevention of Corruption Act, 1988 (P.C. Act, 1988), and under letter No. DPSHG2011/6103/N.C. Hills Cases dated

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26.12.2011 forwarded a copy of Charge Sheet No. 08 dated 23.11.2011 filed against Shri Depolal Hojai, Shri Jayanta Kr. Ghosh @ Drubo Ghosh, Shri Pradip Kr. Roy, Shri Joythanon Thaosen, Shri Debabrata Seal, Shri Debasish Bhattacharjee, Shri Karuna Sindhu Das, Shri Hemadri Sekhar Das and Shri Keshab Bhattacharjee in the Court of Special Judge, CBI, Assam, Guwahati for offences punishable u/s 120(B), 420, 468, 471 of IPC and Section 13(2) r.w.13(1)(c) & (d) of P.C. Act, 1988.

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3. The said Shri Depolal Hojai was functioning as the Chief Executive Member of N.C. Hills Autonomous Council from 08.01.2008 to 27.11.2008 and Shri Dabiruz Jaman was holding the post of Divisional Forest Officer (DFO) N.C. Hills, Haflong Division from 01.04.2003 to 24.03.2009. Shri Ranbir Singh Gandhi and his son Shri Charanjit Singh Gandhi (the appellants herein), had an agreement with the N.C. Hills Autonomous Council, Haflong since 1993 onwards to supply bamboo to Hindustan Paper Corporation Ltd (HPCL), Jagiroad, Nagaon and Panchgram, Silchar on behalf of the Council.

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4. Shri Ranbir Singh Gandhi, in partnership with his son Shri Charanjit Singh Gandhi and other family members, had established certain partnership firms, viz., M/s Hills Trade Agencies, M/s Dimasa Associates, M/s Enn Cee Hills Traders and M/s Dimalik Forest Agencies sometime in 2006 to carry out the business of supplying bamboo to HPCL.

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5. In the year 2004, the project for four-laning of NH-54 which passes through N.C. Hills was carried out by the National Highway Authority of India (NHAI) and an amount of Rs. 9,48,33,330/- was paid by NHAI to the DFO, N.C. Hills, Haflong Division for the purposes of

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compensatory afforestation during the period from 06.09.2006 to 16.12.2010.

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6. Out of the said amount of Rs. 9,48,33,330/-, Rs. 58,65,265/- was received and utilized by the next DFO, Shri Shankar Hazarika, DFO. Investigations revealed no irregularity in utilization of the said amount of Rs. 58,65,265/-. The remaining amount of Rs. 8,89,68,035/- was received and is stated to have been utilized by Shri Dabiruz Jaman during his tenure as DFO.

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7. Out of the said amount of Rs. 8,89,68,035/-, Shri Dabiruz Jaman had deposited Rs. 3,23,48,618/- into the account of the DFO, N.C. Hills Division, Haflong (A/c No. 4047) maintained at Langpi Dehangi Rural Bank, Haflong and the balance amount of Rs. 5,66,19,417/- was deposited into the DFO, N.C. Hills Division‟s account (A/c No. 0455050032300) at UBI, A.T. Road Branch, Guwahati on 06.03.2008, 08.03.2008, 29.03.2008 & 04.04.2008. The CBI, during its investigation, did not find sufficient evidence to indicate towards any criminality or misappropriation of the first-mentioned amount of Rs. 3,23,48,618/- which was deposited in Langpi Dehangi Rural Bank, Haflong.

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8. However, out of the remaining amount of Rs. 5,66,19,417/- Shri Dabiruz Jaman deposited an amount of Rs. 100,00,000/- into the Principal Secretary (N) Dimasa Associates‟ account (A/c No. 0455050028055) vide Cheque No. 015103 dated 10.03.2008 & Cheque No. 015102 dated 10.03.2008 maintained at UBI, A.T. Road Branch, Guwahati. He also deposited an amount of Rs. 4,49,00,000/- into the Principal Secretary (N) Enn Cee Hill Traders‟ account (A/c No.0455050028063) vide Cheque No.015105 dated 04.04.2008, Cheque

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No. 015107 dated 04.04.2008 maintained at UBI, A.T. Road Branch, Guwahati. Out of the remaining amount of Rs. 17,19,447/-, it is alleged that Shri Dabiruz Jaman had misused Rs. 16,99,000/-. However, we are not concerned with the said amount of Rs. 16,99,000/- in the present appeal.

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9. The further facts are that Standing Instructions had been issued to the Bank by the N.C. Hills Autonomous Councils Authority to automatically transfer the funds received in the above-mentioned account of the Principal Secretary (N) to the account of M/s Dimasa Associates (A/c No. 28020) and M/s Enn Cee Hills Traders (A/c No. 28047), the partnership firms of the appellants, Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi. Accordingly, an amount of Rs. 1,00,00,000/- was deposited into the account of M/s Dimasa Associates on 12.03.2008 and Rs.4,49,00,000/- was deposited into the account of M/s Enn Cee Hills Traders on 09.04.2008 and 11.04.2008.

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10. The amount of Rs. 5,49,00,000/- transferred into the private partnership firms‟ accounts were subsequently withdrawn and utilized by Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi for the purposes of their business such as payment of vehicle loan, overdraft facility, payment to labourers etc. Thus, it is alleged that the entire amount of Rs. 5,49,00,000/- was misappropriated by the N.C. Hills Autonomous Council without implementing any compensatory afforestation schemes for which the money was released by NHAI.

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11. It may be noted here that, as mentioned in para 2 above, there was yet another case against the aforesaid Shri Depolal Hojai, the then Chief Executive Member, N.C. Hills Autonomous Council (now known as Dima Hasao Autonomous Council), which pertains to RC1(A)2010SHG,

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dated 13-05-2010 wherein it was alleged that during the year 2008 he entered into a criminal conspiracy with Shri Jayanta Kr Ghosh @ Drubo Ghosh, a private contractor and awarded works contract worth of Rs. 2.5 crores to him relating to construction of roads under PWD, Mahur Division, Assam. However, for the purposes of these two appeals which have been filed by Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi, we are not concerned with that case.

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12. Since some of the allegations against the accused under the IPC and the P.C. Act constituted scheduled offences under the PMLA, 2002, an ECIR numbered as ECIR No. 02/2013/KLZO/ GWZO/PMLA was registered by the Directorate of Enforcement on 23.08.2013.

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13. Shri Charanjit Singh Gandhi was summoned under Sub-Section (2) and (3) of Section 50 of the PMLA, 2002 and on his appearance, made statements on 09.12.2013 and on 11.03.2016 wherein, he interalia stated that their partnership firms, viz., M/s Dimasa Associates and M/s Enn Cee Hills Traders had a legitimate claim from the N.C. Hills Autonomous Council arising out of the arbitration award in their favour under the direction of the Governor of Assam during Governor's Rule to compensate Rs. 18.08 Crores to them in accordance with the provisions of the Agreement made between them and the Council to supply bamboo to HPCL, Jagiroad and Panchgram on behalf of the Council. He also stated that following the arbitration and acceptance of the award by His Excellency, the Governor of Assam, N.C. Hills Autonomous Council had already paid Rs. 2,00,00,000/- to them from their revenue earning and that the amount of Rs. 5,49,00,000/- received by them from the NHAI funds from the N.C. Hills Autonomous Council was treated as part of the amount due under the compensation award.

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14. On being asked, whether they are willing to refund back the money to the Council as it is alleged that the money they have received from the NHAI fund from the Council was illegitimate, he stated that they are willing to refund back the money to the Council provided the Council pays them through a proper/legitimate channel. Further, he had stated that they were unaware of the funds they have received from the Council were related to the compensatory fund given by NHAI to the Council as they have not been informed by the Council or by the DFO, N.C. Hills, Haflong Divisions.

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15. Summons was also issued to Shri Ranbir Singh Gandhi under Section 50 of PMLA but did not respond to the same.

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16. Shri Depolal Hojai was summoned under Sub-Section (2) and (3) of Section 50 of the PMLA, 2002 and on his appearance, he made statements on 28.01.2014 and on 22.03.2016 wherein, he inter-alia stated that he was not aware of the violation of District Fund Rules, N.C. Hills Autonomous Council Code 1992 and the provision of 6th Schedule in transferring the funds received from NHAI into the Divisional Forest Officer accounts and then transferring the same into the Principal Secretary (Normal) account. He also stated that he had authorized UBI Bank, AT Road Branch to transfer the funds received from NHAI into the Principal Secretary (Normal) accounts from the Divisional Forest Officer account maintained in the same branch under the advice of Shri Prokanta Warisa, the then adviser to the Chief Executive Member of HC Hills Autonomous Council. Further, he stated that he does not have personal knowledge of the arbitration award regarding compensation to Shri Ranbir Singh Gandhi and his son Charanjit Singh Gandhi. However, he had heard that there was an

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arbitration award in favour of Shri Ranbir Singh Gandhi and his son Shri Charanjit Singh Gandhi and some amounts had already been paid to them by the Council earlier.

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17. Shri Prokanta Warisa was summoned under Sub-Section (2) and (3) of Section 50 of the PMLA, 2002 and on his appearance, made a statement on 07.02.2014 wherein, he inter alia stated he was appointed as the Adviser to CEM, N.C. Hills Autonomous Council in February 2008 as an honorary post in the Council and Shri Depolal Hojai was the CEM, N.C. Hill Autonomous Council at that time. On being asked why he had advised Shri Depolal Hojai to issue instructions to UBI Bank, A.T. Road Branch to transfer the funds received from NHAI into the Principal Secretary (N)‟s account, he replied that he had not tendered such advice to Shri Depolal Hojai. Further, he had stated that, he was aware that the Gandhis, Shri Ranbir Singh Gandhi and his son Shri Charanjit Singh Gandhi who were engaged in the business of supplying bamboo, had claimed compensation and an arbitrator had awarded some compensation to them on account of damage caused to the bamboo already felled.

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18. From the investigations conducted under the PMLA, 2002, the Ld. Joint Director concluded that withdrawing and utilizing funds without knowing the actual source and without receiving confirmation from the Council indicates that Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi had mala fide intention to misappropriate the fund. In consequence of the aforesaid finding, he held that the properties identified during PMLA investigation in respect of Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi, although such properties have been purchased before the commission of the offence, are liable for

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provisional attachment for the value thereof for, i.e., Rs.5,49,00,000/for the proceeds of crime derived by them by committing scheduled offence. Accordingly, he passed a provisional attachment order attaching the properties of the appellants herein as mentioned in the Table in para-1 above.

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19. An Original Complaint (O.C.) having been filed before the Ld. AA as per the requirement of Section 5(5) of the Act, the Ld. AA, vide the impugned order dated 16.09.2016, confirmed the attachment of the properties.

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20. Aggrieved by the said order of the Ld. AA, the two appellants have filed these appeals challenging the same on various factual and legal grounds.

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Arguments on behalf of the Appellants

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21. The first contention put forward on behalf of the appellants is that the conditions prescribed under sections 5 and 8 which provide for recording of satisfaction by the respective authorities was not met in the present case. The authority has merely repeated the language of the statute and have not arrived at any independent satisfaction to the fact that the offence of money laundering has been committed under section 3 and if the property was not attached immediately the proceedings under the Act will be frustrated. In this regard, the appellants have relied upon the decisions of the Hon'ble Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement wherein it was held that mere repetition of the language of statute will not suffice to constitute reason to believe under said provision.

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22. It is also submitted that although the judgment in the case of J. Sekar v. Union of India & Ors. W.P. (C) 5320/2017 (order dated 11.01.2018) passed by Hon‟ble High Court of Delhi has been stayed by the Hon‟ble Supreme Court, the settled position of law on the aspect is that stay of judgment merely prohibits the implementation of it between the parties inter se, but does not wipe out the ratio of the judgment, which continues to apply with full force and is binding. The appellant has relied upon the judgments in Govt. of AP v. N Rami Reddy & Ors, 2000 SCC Online AP 721 (para 10-14); Niranjan Chatterjee & Ors, v. State of West Bengal & Ors. 2007 SCC Online Cal 283 (para 17,18,20) & Palaniswamy & Anr. v. State of AP Revenue Dept. & Ors. 2018 SCC Online Hyd 16 (para 13,16,19,20) . Thus, it is contended, that the proposition laid down in J. Sekar v. Union of India, i.e., mere reproduction of words of statute will not suffice to show satisfaction of the authority before attachment, continues to hold the field. For the same proposition, it is contended that judgment of the Hon‟ble Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement was challenged before the Supreme Court and the SLP was dismissed vide order dated 30.4.2021.

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23. It is next contended that the properties were purchased much before the alleged period of commission of the predicate offence. It is submitted that the relevant documents have been brought on the record by the Respondent No.2 (Canara Bank) along with their reply in the appeal. The period of the alleged crime is April 2008 whereas the properties have been purchased by the appellants between 1999 and 2003. The decision of Hon'ble Supreme Court, in Pavana Dibbur Vs. Directorate of Enforcement (2023) SSC Online 1856 wherein it was held that the property sought to be attached by the directorate was

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purchased prior to the dates of the alleged crime the same cannot constitute proceeds of crime and therefore cannot be attached. It is also pointed out that the respondent has placed reliance upon two judgments passed by the High Court of Delhi, namely, Deputy Director, Directorate of Enforcement & Ors. v. Axis Bank & Ors and Prakash Industries Ltd. & Ors. v. Directorate of Enforcement to contend that appellants' property, even though unconnected to the proceeds of crime and purchased much prior to the alleged commission of scheduled offence, can be attached. However, the aforesaid judgments on the said proposition are impliedly overruled in light of the judgment of the Supreme Court in Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586 (para 7 & 31-C) . For the same proposition, it is also pointed out that the judgment of the Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement referred to above, was challenged before the Supreme Court but the SLP was dismissed vide order dated 30.4.2021.

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24. It next contended that the amount in question had been utilized by the appellant in the month of April 2008 itself for the purposes of their business as stated in para 10 above. At that time, none of the alleged offences, including section 409 and 120B of the IPC and Section 13 of P.C. Act were part of the Schedule to the PMLA, 2002. Further, the amount having already been utilized by the appellant there was no question of any continuing offence after the said period.

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25. The appellants were not in possession of the alleged proceeds of crime on the date when the said offences were included in the Schedule. In this context, it is also submitted that there is a constitutional bar on

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retrospective applicability of the criminal law and the same cannot be applied ex-post facto.

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26. In the written synopsis of arguments, filed subsequently, it was further submitted that the submission of the respondent's counsel during oral arguments that the appellant has not challenged the proceedings emanating from the FIR (RC) registered by CBI is wholly incorrect. The charges were challenged by the appellant before the Guwahati High Court which passed the order dated 14.6.2019, thereby quashing the charges framed under section 409 IPC. A copy of the order is also submitted. Further, vide order dated 19.9.2023, the trial court has observed that trial would not proceed further without any specific order and disposal of the said Criminal petition before the Hon‟ble Gauhati High Court. A copy of the said order dated 19.9.2023 passed by the Special Judge, CBI, is also submitted.

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27. Based on the above-mentioned arguments, it is prayed on behalf of the appellants that the present appeals be allowed.

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Arguments on behalf of the Respondent

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28. The Respondents, in their submissions, have argued that the procedure under section 5 of PMLA, 2002 was duly followed, reasons to believe formed and recorded in writing and copy of reasons to believe recorded were duly forwarded by Ld. AA in terms of provisions of PMLA, 2002. As far as supply of reasons to believe to the appellant is concerned, it is submitted that there are no provisions under PMLA to supply copy of the reasons to believe to the concerned persons.

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29. Similarly, the requirements of the section 8 of the PMLA,2002 have been duly followed in letter and spirit by the Ld. AA. After the

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detailed perusal of the reasons to believe and material in possession, a Show Cause Notice has been issued by the Ld. AA.

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30. The Respondent has relied on the judgement on Deputy Director, Directorate of Enforcement and Ors. Vs. Axis Bank and Ors. (MANU/DE/1120/2019) and Prakash Industries Ltd and Ors. vs. Directorate of Enforcement (MANU/DE/2491/2022) to justify the attachment of the property as “value thereof”.

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31. The Respondent has further relied on the judgement in the case of Vijay Madanlal Choudhary vs. Union of India , to substantiate the view that the offence of money-laundering is not dependent on or linked to the date on which the scheduled offence has been committed, the relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime.

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32. Based on the above arguments, it is prayed on behalf of the Respondent that the present appeal be dismissed.

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Analysis & Findings

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33. I have given careful consideration to the material on record and the rival submissions of the parties. The first contention of the appellant is that the conditions prescribed under sections 5 and 8, which provide for recording of satisfaction by the respective authorities, were not met in the present case. The authority has merely repeated the language of the statute and has not arrived at any independent satisfaction to the fact that the offence of money laundering has been committed under section 3 and if the property was not attached immediately, the proceedings under the Act will be frustrated. The decisions of the Hon'ble Punjab and Haryana High Court in Seema Garg v. Deputy

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Director, Directorate of Enforcement, and the judgment of the Hon‟ble Delhi High Court in J. Sekar v. Union of India & Ors. are relied upon. It is also contended that though the judgment in the latter case has been stayed by the Hon‟ble Supreme Court, as per the settled legal position, its ratio would continue to apply.

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34. In this context, I have perused the reasons recorded by the respondent Directorate in the present case, which are on record. The same are extracted below for ready reference:

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“Materials relating to commission of offence and reason to believe that an offence of Money Laundering has been committed and assessment thereof:

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“Investigation revealed that Shri Debiruz Zaman @ Dabiruz Jaman (A-1) was holding post of Divisional Forest Officer, North Cachar Hills Division, Haflong from 01.04.2003 to 24.03.2009. Shri Depolal Hojai (A-2) was elected as Member, N.C. Hills Autonomous Council in the year 2007 and was functioning as Chief Executive Member from 08.01.2008 to 27.11.2008. Shri Rnbir Singh Gandhi (A-3) established a firm namely M/s Hills Trade Agencies with its address at 407 P.B. Complex, AT Road, Guwahati- 781001 in partnership with his son Shri Charanjit Singh Gandhi @ Charanjeet Singh Gandhi (A-4) and other family members. The firm was dealing in the business of supply of bamboo to Hindustan Paper Corporation Ltd., Jagiroad, Nagaon and Panchgram, Silchar on contractual terms on behalf of N.C. Hills Autonomous Council, Haflong since the year 1993 onwards. He also established another three firms namely M/s Dimasa Associates, M/s Enn Cee Hills Traders and M/s Dimalik Forest Agencies in October 2006 for the same purpose. The partners of the said three firms are Shri Ranbir Singh Gandhi, Shri Charanjit Singh Gandhi and one local partner each from Haflong i.e. Shri Ringmanon Kemprai for Dimasa Associates, Shri Paijendra Hagier for Enn Cee Hills Traders and Shri Sumud Hojai for Dimalik Forest Agencies. The three local partners were made sleeping partners and

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were neither authorized to operate any bank account in the name of the firms. That out of the total amount of Rs. 9,48,33,330/- as received by Divisional Forest Officer, NCHD, Haflong from NHAI, an amount of Rs. 58,65,265/- vide cheque No. 166765 dated 16.12.2010 was received and utilized by Shri Sankar Hazarika, DFO, successor of Shri Debiruz Zaman (A-1) and in course of investigation, no irregularity could be detected in the utilization of this amount of Rs. 58,65,265/-. Whereas, the remaining amount of Rs. 8,89,68,035/- was received by Shri D. Zaman (A- 1) during his tenure as the Divisional Forest Officer, NCHD, Haflong. Shri Debiruz Zaman in criminal conspiracy with Shri Depolal Hojai, Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi has dishonestly deposited the remaining amount of Rs. 5,66,19,417/- in account No. 0455050032300 opened in the name of DFO, NCHD at United Bank of India, AT Road, Guwahati, as under:-

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*Sl. No.*	*Account No. 0455050*	*032300 WITH UBI A.T. ROAD, GUWAHATI*
	Date of Deposit	Details of instrument	Amount(in Rs)
1	06.03.2008	Cheque No. Dt. 23.02.2008	38,74,417/-
2	08.03.2008	DD No.808048 dt. 07.03.2008	78,00,000/-
3	29.03.2008	DD. No. 808286 Dt.29.3.2008	2,91,00,000/-
4	04.04.2008	Cheque No. 994889 dt. 03.04.2008	1,58,45,000/-
	*Total*		*5,66,19,417/-*

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The aforesaid amount of Rs. 5,66,19,417/- deposited on the basis of letter dated 29.02.2008 of Shri Depolal Hojai, the then Chief Executive Member, NCHAC, Haflong, who also instructed to transfer the funds to the account of the Principal Secretary (N) (A/c Dimasa) maintained in the same bank.

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Investigation revealed that in pursuance of their criminal conspiracy, Shri Debiruz Zaman (A-1) transfer, an amount of Rs. 5,49,00,000/outdd the above noted total amount of Rs. 5,66,19,417/-, to the A/c No. 28055 A/c Dimasa (CBS No. 0455050028055) and A/c No. 28063 A/c Enn Cee (CBS No. 04550028063) of Principal Secretary (N), NCHAC, Haflong maintained with UBI, AT Road Branch as per the instruction vide said letter dated 29.02.2008 of Shri Depolal Hojai (A-2), through the following cheques. Whereas out of the remaining amount of Rs. 17,19,417/- an amount of Rs. 16,99,000/-

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was dishonestly withdrawn in cash and misappropriated by Shri Debiruz Zaman (A-1) :-

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*Sl.*	*A/c of PS(N) vide No. 28*	*055*	*A/c of PS (N) vide N*	*o. 28063*
*No.*	*(A/C Dimasa)*		*(A/c Enn Ce*	e)
	*Details of Cheque*	*Amount* *(in Rs.)*	*Details of Cheque*	*Amount* *(in cheque)*
1	Cheque No. 015103 Dt. 10.03.2008	65,00,000/-	Cheque No. 015105 Dt. 04.04.2008	2,91,00,000/-
2	Cheque No. 015102 Dt. 10.03.2008	35,00,000/-	Cheque No. 015107 Dt. 04.04.2008	1,58,00,000/-
	*Total*	*1,00,00,000/-*	*Total*	*1,58,00,000/-*

¶96

Investigation further revealed that for facilitating the transfer of fund due to be received from HPCL account of supply of bamboo to HPCL by the contractor of NCHAC in the A/c of M/s Dimasa Associates and M/s Enn Cee (both the partnership Firms of Shri Ranbir Singh Gandhi & Charanjit Singh Gandhi), the above two A/cs of PS(N), NCHAC was opened/maintained with UBI, AT Road Branch. Investigation has also transpired that as per the Standing Instruction dated 24.11.2006 given to the bank, as issued at the time of opening of the aforesaid two Accounts.

¶97

M.s Enn Cee Hills Traders & M/s Dimasa Associates, who were also having Accounts with the same branch of UBI.

¶98

In this context, it may be further mentioned here that as per instruction, as issued by Shri Depolal Hojai (A-2), Shri D. Zaman (A1) and DFO, NCHD was supposed to transfer the fund to the A/c of PS NCHAC (A/c Dimasa) only and not to the A/c of PS NCHAC (A/c Enn Cee). However, the act of transferring of fund of Rs. 4,49,00,000/- to the A/c of PS NCHAC (A/c Enn Cee) by Shri D. Zaman (A-1) also indicate his criminal conspiracy with Shri Ranbir Singh Gandhi (A-3) & Shri Charanjit Singh Gandhi (A-4).

¶99

The criminal conspiracy of Shri Debiruz Zaman (A-1), Shri Depolal Hojai (A-2), Shri Ranbir Singh (A-3) and Shri Charanjit Singh Gandhi (A-4) has been further substantiated by the fact that all the Credit Vouchers for depositing the amounts in the said A/c Dimasa and A/c Enn Cee were filling up and deposited in the Bank by Shri S. Pareek, an employee of Shri R.S. Gandhi and Shri Charanjit Singh on their instruction (A-3 & A-4). Further, one DD No. 808048 dated

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07.03.2008, issued by Project Implementation Unit, NHAI, Silchar was personally collected by one S.k. Jha, an employee under Shri Ranbir Singh Gandhi (A-3) & Charanjit Singh Gandhi (A-4), based at Lanka, Assam, who operates one A/c of said Gandhi's maintained in the name of M/s Hills Trade Agency with UBI, Lanka Branch. Said draft, so collected, was deposited in the A/c of DFO, NCHD maintained with UBI, AT Road Branch on the next day on 08.03.2008. The draft, which was collected on 07.03.2008 by Shri S.K. Jha from Silchar, being deposited at Guwahati on the next dated on 08.03.2008 by Shri Debruz Zaman (A-1) himself, clearly indicates that after collection of draft from Silchar, said Shri S.K. Jha ensured forwarding of said draft to Guwahati by Air/Road and handed over the draft to Shri Debiruz Zaman (A-1) for ensuring its deposit by Shri Debiruz Zaman (a-1) IN HIS a/C ON THE NEXT DAY ON 08.03.2008.

¶103

Investigation has further transpired that after the aforesaid fund of Rs. 5,49,00,000/- was received in the above noted two A/cs of PS NCHAC (A/c Enn Cee) & PS NCHAC (A/c Dimasa), the same were automatically transferred to the following A/cs of M/s Dimasa Associates and M/s Enn Cee Hill Traders on the following dates:-

¶104

*Sl. No.*	*Ac. Of Dimasa Associates no. 28020*	*Ac. Of Enn Cee Hill Traders no. 28047*
1	12.03.2008 for Rs. 1,00,000/-	09.04.2008 Rs. 2,91,00,000/-
2		11.04.2008 for Rs. 1,58,00,000/-
*Total*	*1,00,00,000/-*	*4,49,00,000/-*

¶105

That Shri Debiruz Zaman (A-1) and Shri Depolal Hojai (A-2) by abusing their official powers/positions and in criminal conspiracy with each other and also with accused Shri Ranbir Singh Gandhi (A3) and Shri Charanjit Singh Gandhi (A-4) had fraudulently and dishonestly misappropriated the fund of Rs. 5,49,00,000/- released by NHAI towards Compensatory Afforestation, Timber/Poles Operations etc. without implementing any schemes for which the fund was released and thereby caused huge wrongful loss to the Government of Assam to the tune of Rs. 5,49,00,000/- and corresponding wrongful gain to themselves to that extent.

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On the basis of the aforesaid information/ documents (s), a prima – facie case for an offence of money-laundering (section 3 of the Prevention of Money Laundering Act, 2002) punishable u/s 4 of the said Act appears to have been made out.

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A case is therefore, registered and is taken up for investigation under the provisions of the Prevention of money laundering Act, 2002 and the Rules framed thereunder.”

¶110

35. Having perused the above reasons to believe recorded by the Investigating Officer (I.O.) with the approval of the Deputy Director, I do not find any substance in the contention of the appellants that the condition u/s 5(1) of recording the reasons was not met. It is found that detailed reasons for the action initiated under the provision have been recorded by the respondents before initiating the action. As regards, the reasons under section 8, it is seen that the language of the said provision is different insofar as section 8 does not specifically lay down that the reasons to believe are to be recorded or that there should be any material in possession, other than the original complaint filed by the Directorate under section 5(5). Nor does the provision specifically necessitate recording of the reasons in writing. Nevertheless, a perusal of the impugned order itself provides the detailed reasons leading to the registration of ECIR by the Directorate, further investigations conducted by the Directorate and the complaint received by the Ld. AA from the Directorate u/s 5 (5). As such, there is little substance in this averment of the appellant either. As regards, the further contention that the reasons to believe were not conveyed to the appellant, I find that this legal issue remains to be finally settled. As pointed out, a Single Judge Bench of the Hon‟ble Delhi High Court in the case of J. Sekar (supra) has held that reasons have to be communicated to the noticees.

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However, another single judge bench of the Hon‟ble Madras High Court, in G. Gopalakrishnan Vs. Deputy Director WP (MD)Nos. 11454, 14860 & 14894 to 14899 of 2018 (Order Dt. 03.01.2019), has held that section 5 nowhere stipulates that there should be communication of reasons in the form of show cause notice before ordering provisional attachment. The validity period of provisional attachment is only for a period of 180 days, and therefore, the initial order has all the characteristics of a show cause notice and no further requirement is contemplated in the statute. Further, it was also noted that the language used in section 8(1) of the Act is different from the one used in section 5(1). The AA is not required u/s 8(1) to record reasons and on the basis of the complaint filed by the initial authority u/s 5(5) can proceed with the process on the basis of subjective satisfaction.

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36. In view of the factual position brought out in paragraph 34 above, as well as the legal position discussed in paragraph 35 above, I do not find sufficient grounds to hold that the actions taken under sections 5 and 8 were not valid for want of recording of reasons (which were duly recorded) or on account of non-communication of the reasons by the relevant authorities.

¶115

37. It is next contended that the properties were purchased much before the alleged predicate offence. It is also submitted that the relevant documents have been brought on the record by the Respondent No.2 Canara Bank along with their reply in the appeal. The alleged crime took place much later, in April 2008. The fact of the acquisition of the properties prior to the alleged period of offence has not been disputed by the respondents. The decision of Hon'ble Supreme Court, in Pavana Dibbur Vs. Directorate of Enforcement (2023) SSC Online 1856 is

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relied upon wherein it was held that the property sought to be attached by the Directorate was purchased prior to the dates of the alleged crime and the same cannot constitute proceeds of crime and, therefore, cannot be attached. It is also submitted that the respondent has relied upon two judgments passed by the High Court of Delhi, namely, Deputy Director, Directorate of Enforcement & Ors. v. Axis Bank & Ors and Prakash Industries Ltd. & Ors. v. Directorate of Enforcement to contend that appellants' property, even though unconnected to the proceeds of crime and purchased much prior to the alleged commission of scheduled offence, can be attached. However, the aforesaid judgments on the said proposition are impliedly overruled in light of the judgment of the Supreme Court in Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586 (para 7 & 31-C) . For the same proposition, it is also pointed out that the judgment of the Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement referred to above, was challenged before the Supreme Court but the SLP was dismissed vide order dated 30.4.2021.

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38. I have considered the above contention of the appellants. At the outset, it may be mentioned that the Canara Bank was impleaded as respondent in the present case vide an order dated 04.12.2018 based on the finding that the Canara Bank was Defendant No. 7 in the complaint and the subject properties had been mortgaged with the Bank. With its reply on 31.01.2019 the Bank had submitted copies of the title deeds of the properties standing in the name of the appellants herein which had been offered as securities to the Bank. The same were taken on record. In subsequent proceedings, it was submitted on behalf of the Bank that the loan account has since been closed and the Bank has no further interest in the case. Accordingly, there are no issues pending for

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decision before this Appellate Tribunal in the present case in so for as Respondent No. 2 (Canara Bank) is concerned.

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39. Coming back to the legal issue raised by the appellant, namely, that the property could not have been attached as it was acquired prior to the period of the alleged predicate offence, in Sadananda Nayak v Deputy Director, FPA-PMLA-5612/BBS/2023 (order dated 14.10.2024) this Appellate Tribunal has held as follows:

¶124

“12. The reference of the judgment of the Apex Court in the case of Pavana Dibur (supra) and also of Kerala High Court in the case of Satish Motilal Bidri (supra) has been given. To analyze the issue, we may quote the definition of `proceeds of crime’ given under Section 2(1) (u) of the Act of 2002, which is quoted thus:

¶125

“(u) “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property [or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;

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Explanation. For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;”

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13. The perusal of the definition aforesaid shows three limbs. In between every limb word “or” has been used to divide the definition into three parts. The first part refers

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to the property acquired or derived directly or indirectly out of the criminal activities relating to the scheduled offence. In the first part, all those properties which are acquired directly or indirectly out of criminal activities would be termed to be the proceeds of crime. The properties can be acquired directly or indirectly with the use of proceeds of crime. The use of proceeds directly or indirectly would be relevant part to fall in first part of the definition of proceeds of crime’. To clarify the definition, it may be illustrated. Assuming in a case of dacoit, the accused secured the money and it has been used for the purchase of property, then such a property would fall in the definition of proceeds of crime’ having been obtained out of proceeds of crime. In other case where the property was not acquired or derived by the accused himself but he passed on money out of the crime to another person and he acquired the property, then also it would be considered to be the proceeds of crime to acquire the property. In any case, there should be an element for use of the proceeds directly or indirectly obtained out of the crime and thereby the property would have nexus with the crime. 14. In second part “the value of any such property” the definition aforesaid starts with “or” after the first part referred and discussed in the para above. The second

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part of the definition is commonly considered to be attachment of property of equivalent value. The second part applies when the property obtained or derived directly or indirectly out of the criminal activities is not available or vanished and, therefore, to secure the proceeds of equivalent value till completion of trial, it would fall under “the value of any such property” which is commonly taken to be the property of equivalent value. The case in hand falls in the second category of the definition of “proceeds of crime” because proceeds are not available and, therefore, the property of equivalent value is attached.

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15. The argument has been made in reference to the judgment of Kerala High Court in the case of Satish Motilal Bidri (supra) and the judgment of Apex Court in Pavana Dibur (supra) to hold that the properties acquired prior to commission of crime would not fall in the definition of “proceeds of crime”. We are unable to accept the arguments which may otherwise make second part of the definition of “proceeds of crime” to be redundant. It would be for the reason that if the definition is taken only in two parts leaving the middle part, then it would be difficult for the enforcement agencies to protect the property till completion of the crime to save the victim from crime committed by the accused. It would be for the reason that

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if the property acquired prior to commission of crime would not fall in the definition of “proceeds of crime”, then the accused would commit the crime and immediately proceeds would be siphoned off or vanished so that it may not remain available for attachment. In fact, the word “the value of any such property” was inserted by the legislature to attach the property of equivalent value, if the proceeds out of commission of crime is not available or vanished. If the second limb of the definition is made dependent on the first limb, it would be literally re-writing the provision or making it redundant to a great extent and for this, jurisdiction does not lie with any court of law which includes even the Constitutional Court. They can declare any provision to be unconstitutional but till then there remains presumption of constitutional validity.

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16. At this stage, we may refer to Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) which is quoted hereunder.

¶139

“68. It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of “proceeds of crime” is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such

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a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of “property” as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering.”

¶143

The perusal of the para quoted above shows that the argument of the appellant that “the value of any such property” would be only when the proceeds have been taken out of India. The argument aforesaid was not accepted and it simplifies that the definition of “proceeds of crime” has three limbs and elaborate judgment to define the “proceeds of crime” was given by the Delhi High Court in the case of Axis Bank (supra). The relevant paras are quoted herein.

¶144

“106. Among the three kinds of attachable properties mentioned above, the first may be referred to, for sake of convenience, as “tainted property” in as much as there would assumable be evidence to prima facie show that the source of (or consideration for) its acquisition is the product of specified crime, the essence of “money laundering” being its projection as “untainted property” (Section 3). This would include such property as may have been obtained or acquired by using the tainted property as the consideration (directly or indirectly). To illustrate, bribe or illegal gratification received by a public servant in form of money (cash) being undue advantage and dishonestly gained, is tainted property acquired “directly” by a scheduled offence and consequently “proceeds of crime”. Any other property

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acquired using such bribe as consideration is also “proceeds of crime”, it having been obtained “indirectly” from a prohibited criminal activity within the meaning of first limb of the definition.

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107. In contrast, the second and third kinds of properties mentioned above would ordinarily be “untainted property” that may have been acquired by the suspect legitimately without any connection with criminal activity or its result. The same, however, are intended to fall in the net because their owner is involved in the proscribed criminality and the tainted assets held by him are not traceable, or cannot be reached, or those found are not sufficient to fully account for the pecuniary advantage thereby gained. This is why for such untainted properties (held in India or abroad) to be taken away, the rider put by law insists on equivalence in value. From this perspective, it is essential that, before the order of attachment is confirmed, there must be some assessment (even if tentative one) as to the value of wrongful gain made by the specified criminal activity unless it be not possible to do so by such stage, given the peculiar features or complexities of the case. The confiscation to be eventually ordered, however, must be restricted to the value of illicit gains from the crime. For the sake of convenience, the properties covered by the second and third categories may be referred to as “the alternative attachable property” or “deemed tainted property”.

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17. The judgment of the Delhi High Court makes it clear that the definition of “proceeds of crime” has three limbs and in the second limb the properties of equivalent value to the proceeds obtained out of crime can be attached which may have been acquired prior to the commission of crime

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but it would be when proceeds of crime has been vanished and is not available. It is sought to achieve the object of the Act of 2002.

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18. In the light of judgment of the Apex Court in Vijay Madanlal Choudhary (supra), we are unable to apply the judgment of Kerala High Court in the case of Satish Motilal Bidri (supra). The Ld. counsel did not refer the relevant para of the judgment in the case (supra), rather he referred Para 66 of the judgment of the Apex Court in Vijay Madanlal Choudhary (supra) which permits attachment only of the proceeds of crime. There cannot be any dispute that attachment can be only of the proceeds of crime but what would fall in the definition of “proceeds of crime” and clarified in Para 68 of the same judgment has not been taken into consideration whereas judgement of the Apex Court on the issue is binding on the High Court. 19. The reference to the judgment in the case of Pavana Dibur (supra) has been given where the Ld. Counsel for the parties did not refer Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) decided by three judges of the Apex Court. In fact, elaborate arguments to define “proceeds of crime” on the issue were not raised by the parties after referring to the object of the Act of 2002 which was enacted out of the international

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convention. The Delhi High Court has discussed the issue elaborately and otherwise if we apply the judgement of Kerala High Court in the case of Satish Motilal Bidri (supra,) it would be making the second limb of the definition of “proceeds of crime” to be redundant. The counsel who appeared before the Kerala High Court did not argue that the definition of “proceeds of crime” has three limbs and unfortunately the view expressed by Delhi High Court in Axis Bank (supra) was not discussed elaborately while it was cited by the counsel.

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20. The Ld. Single judge of Kerala High Court did not subscribe the judgment aforesaid, rather applied the judgment of Punjab and Haryana High Court in the case of

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Seema Garg Vs. Deputy Director, Directorate of Enforcement , reported in 2020 SCC OnLine Punjab & Haryana 738. With due respect, we are unable to apply the judgment of Kerala High Court going against Para 68 of the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra). The judgment of Seema Garg (Supra) has been dealt with by the Delhi High Court in the case of Prakash Industries Ltd. v. Directorate of

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Enforcement reported in 2022 SCC OnLine Del 2087. The relevant paras are quoted hereunder:

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“76. Seema Garg principally holds that the phrase value of any such property and property equivalent in value held within the country or abroad cannot be ascribed the same meaning and effect. The learned Judges comprising the Division Bench then proceeded to hold that even if the intent of the legislature was to include any property in the hands of a person within the ambit of the expression proceeds of crime‖, there would be no need to create three limbs of definition of proceeds of crime.

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79. Regard must also be had to the fact that the legislation itself is dealing with contingencies where proceeds of crime are layered and their origins camouflaged and masked enabling the accused to project or claim it to be untainted property. The Act clearly as does Axis Bank take into consideration a situation where a person who has obtained proceeds of crime by commission of a scheduled offence has managed to ensure that a property directly or indirectly connected to criminal activity is rendered untraceable. It is to confer authority upon the Directorate to proceed further in such a situation that Section 2(1)(u) uses the expression or the value of any such property. The safeguard which stands constructed in Section 2(1)(u) in such a contingency is that in case the Directorate does proceed against any other property, it must be equivalent in value to the illegal pecuniary benefit or gain that may have been obtained as a result of criminal activity.

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80. In the considered opinion of this Court to tie the Directorate’s power to move forward in this direction only in cases where property is taken or held outside the country would not only do violence to the plain language of Section 2(1)(u), it would clearly whittle down the scope and intent of the definition itself. It would essentially amount to erasing the expression value of any such property as appearing in Section 2(1)(u) altogether. The Court further notes that in Seema Garg the learned Judges themselves observed that the phrase value of any such property would not mean and include any property which has no link, direct or indirect, with property derived or obtained from commission of a scheduled offence. The Court observes that Section 2(1)(u) clearly and in unambiguous terms includes not only property

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derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence but also the value of any such property. Seema Garg thus seems to gloss over the statutory imperatives underlying the deployment of the phrase ―or the value of any such property and the concept of deemed tainted properties enunciated in Axis Bank. On a plain textual interpretation of Section 2(1)(u) as well as in the backdrop of the amendatory history of that provision, this Court finds itself unable to agree with the line of reasoning adopted in Seema Garg. As held hereinbefore, affirmation of Seema Garg would amount to virtually deleting the phrase ―or the value of any such property from Section 2(1)(u). That would not only violate the well settled tenets of statutory construction but would clearly amount to the Court rewriting the provision itself in a manner that it stands deprived of vital and purposive content. The Court further notes that Axis Bank had enunciated important safeguards which would apply in respect of third-party interests in deemed tainted property. Those caveats duly secure and protect bona fide third-party interests created for valid consideration. This Court, thus, reaffirms those defences as were culled out in Axis Bank. The Court thus reiterates the interpretation accorded to Section 2(1)(u) by this Court in the aforesaid decision. Consequently, and for all the aforesaid reasons this Court finds itself unable to agree with the principles as laid down in Seema Garg as well as the subsequent decisions rendered by the Andhra Pradesh High Court in Kumar Pappu Singh Vs. Union of India and the Patna High Court in HDFC Bank Limited Vs Government of India, Ministry of Finance.

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81. The Court also takes note of the position that although SLP (Crl) No. 28906/2019 is pending before the Supreme Court against the decision rendered in Axis Bank, the judgement of this Court has not been stayed or placed in abeyance. The interim order of 30 August 2019 passed in the aforesaid Special Leave Petition only requires parties to maintain status quo. Insofar as the judgement of the Punjab and Haryana High Court in Seema Garg is concerned, although SLP (C) No.14713-14715/2020 preferred against the same

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came to be dismissed, while doing so the Supreme Court recorded that the petition was being rejected in the peculiar facts and circumstances of the case. The dismissal of the aforesaid Special Leave Petition cannot in any case be interpreted or understood as being an affirmation of the view as expressed by the Punjab and Haryana High Court.

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105. It would be pertinent to recall that properties which were acquired prior to the enforcement of the Act may not be completely immune from action under the Act in light of what this Court had held in Axis Bank. As was explained by the Court in Axis Bank, the expression proceeds of crime envisage both ―tainted property as well as ―untainted property with it being permissible to proceed against the latter provided it is being attached as equal to the “value of any such property” or “property equivalent in value held within the country or abroad”. However, both the italicised categories would be liable to be invoked in cases where the actual tainted property cannot be traced or found out. It is only where the respondents are unable to discover the tainted property that they can take the statutory recourse to move against properties which may fall within the ambit of ―value of any such property or ―property equivalent in value held within the country or abroad. To the aforesaid limited extent, properties purchased prior to 01 July 2005 may also become vulnerable and subject to action under the Act. However, enforcement action against such properties would have to satisfy the tests and safeguards as propounded in Axis Bank with the learned Judge observing that in such a situation it would have to be established that the person accused of money laundering had an interest in such property at least till the time that he indulged in the proscribed criminal activity. The learned Judge further observed that bona fide rights acquired by third parties prior to the commission of the predicate offense would stand saved.”

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21. The issue aforesaid was not raised in the case of Pavana Dibur (supra). The counsel appeared therein did not elaborately argue the issue by referring to the

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definition of “proceeds of crime” having three limbs to give meaning to each limb for the interpretation of the definition of the “proceeds of crime”. The reference of Para 68 of the judgment of three judges Bench of the Apex Court in the case of Vijay Madanlal Choudhary (supra) was not cited and thus counsel for the respondent submitted that the judgment in the case of Pavana Dibur (supra) does not propound ratio on definition of “proceeds of crime” and, therefore, direction for the property acquired prior to commission crime is to be taken on facts of that case.

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22. It has already been clarified by us that if the definition of “proceeds of crime” is given interpretation by dividing it into two parts or by taking only two limbs, then it would be easy for the accused to siphon off or vanish the proceeds immediately after the commission of scheduled offence and in that case none of his properties could be attached to secure the interest of the victim till conclusion of the trial. This would not only frustrate the object of the Act of 2002, but would advance the cause of the accused to promote the crime of money laundering. The Judgment in the case of Vijay Madanlal Chaudhary (supra) is of three judges bench while the judgment in the case of Pavana Dibur (supra) is of two judges bench. The issue has otherwise been dealt with by this Tribunal in the case

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of FPA-PMLA-2909/CHD/2019 M/s. Besco International FZE vs. The Deputy Director Directorate of Enforcement, Chandigarh dated 31.07.2024. The

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relevant para of the said judgment is quoted hereunder:

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“It is not that only those properties which have been were derived or obtained directly or indirectly out of the crime can be attached rather in case of non-availability of the property derived or obtained directly or indirectly rather when it is vanished or siphoned off, the attachment can be of any property of equivalent value.

¶185

It is necessary to clarify that the proceeds of crime would not only include the property derived or obtained directly or indirectly out of the criminal activity relating to the scheduled offence but any other property of equivalent value. The word “or” has been placed before “the value of any such property” and is of great significance. Any property of equivalent value can be attached when the proceeds directly or indirectly obtained out of the crime has been vanished or siphoned off. Here, the significance would be to the property acquired even prior to commission of crime. It is for the reason that any property acquired subsequent to the commission of crime would be directly or indirectly proceeds of crime and then, it would fall in the first limb of the definition of proceeds of crime. In the second limb, which refers to “the value of any such property” would indicate any other property which was acquired prior to the commission of crime and it would be attached only when the proceeds directly or indirectly obtained or derived out of the criminal activity is not available. It may be on account of siphoning off or vanished by the accused. In those circumstances the property of equivalent value can be attached. The word “the value of any such property” signifies without any embargo that it should be the property purchased after the commission of crime or prior to it rather it would apply in both the eventuality in the given

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circumstance. Thus, we are not in agreement with the counsel for the appellant who has questioned the attachment in reference to the property acquired prior to commission of crime. We are not going even further that the properties have nexus with the proceeds out of the crime but even in given circumstances and scenario that the property was acquired prior to commission of crime then, also under certain circumstances, it can be attached for “the value of any such property.”

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23. At this stage, it is reiterated that any other interpretation other than the one taken by Delhi High Court in the cases of Axis Bank (supra) and Prakash Industries (supra) for the definition of “proceeds of crime” would defeat the object of the Act of 2002. It is more especially when the arguments raised by the appellant that the property acquired prior to the commission of crime would not fall in the definition of “proceeds of crime”. In that case, the task of the accused would become very easy to first commit the scheduled offence and after obtaining or deriving the property out of the criminal activities, immediately siphon off or vanish so that it may not remain available for attachment and otherwise the contingency aforesaid would satisfy only the first limb of definition of “proceeds of crime” leaving the second. We are thus unable to accept the argument raised by the appellant so as to make the middle part of the definition of “proceeds of crime” to be redundant.

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24. In view of the above, we are unable to accept the only argument raised by the appellant and for that appeal fails and is dismissed.”

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40. Following the ratio of the Appellate Tribunal‟s own judgment in the above-mentioned case of Sadananda Nayak , the contention put forward on behalf of the appellants that the subject properties could not have been attached as they were acquired prior to the alleged period of crime is hereby rejected. In doing so, it is noted that the subject properties have been attached by the respondents in the present case as „value‟ of proceeds of crime as has been categorically noted in the last paragraph of page 17 of the Provisional Attachment Order.

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41. The next contention of the appellants is that the amount in question had been utilized fully by the appellant in the month of April 2008 itself for the purposes of their business, more particularly, for payment of vehicle loan, overdraft facility, payment to labourers etc. As on the said date, none of the alleged scheduled offences, including section 409 and 120B of the IPC and Section 13 of P.C. Act were part of the Schedule to the PMLA, 2002. Further, the amount having already been utilized by the appellant there was no continuing offence nor the appellants were in possession of the alleged proceeds of crime on the date when the said offences were included in the Schedule. In this context, it is also submitted that there is constitutional ban on retrospective applicability of the criminal law and the same cannot be applied ex-post facto.

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42. In this regard, it has been categorically held by the Hon‟ble Supreme Court in Vijay Madanlal Choudhary vs. Union of India (supra) that the provisions relating to attachment and confiscation of properties under the PMLA, 2002 constitute civil action and are not criminal in nature. As such, attachment of property under the said Act per se is not hit by the constitutional bar on retrospective criminal law/punishment under Article 20. The present position is that a charge sheet dated 21.01.2011 stands filed against the two appellants herein along with Shri Depolal Hojai and Shri Dabiruz Jaman, in the Court of Special Judge, CBI, Assam, Guwahati. Though the appellants have moved the Hon‟ble Gauhati High Court for quashing of the Special Case filed against them under Sections 3 and 4 of PMLA, 2002, the said petition of the appellants is still pending before the Hon‟ble High Court. Further, as clarified by both parties in the hearing held on 08.01.2025, prosecution complaint under the PMLA, 2002, also stands filed against the accused persons in this case. Proceedings in the prosecution case under the PMLA, 2002, have been stayed by the Ld. Special Judge following the stay granted by the Hon‟ble Guwahati High Court. It is also clarified by both the counsels that these proceedings before the Appellate Tribunal have not been stayed by any higher judicial authority. Thus, at this stage, when the criminal prosecution case against the appellants is still pending, the attachment of properties cannot be held to be invalid. The legal position is well-settled that attachment of property is a balancing arrangement to secure the interests of the person, as also ensure that the proceeds of crime remain available to be dealt with in the manner provided by the Act. Mere attachment of property does not alter the position with regard to the ownership or even possession/use of the properties which are the subject matter of such attachment. The Hon‟ble

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Supreme Court has held in the aforesaid case of Vijay Madanlal Choudhary , and further clarified in the case of Ganpati Dealcom Pvt. Ltd. Civil Appeal No. 5783 of 2022 (order dated 23.08.22) that possession of properties attached under the PMLA, 2002 can only be taken under exceptional circumstances, such as crimes involving terrorist activities, drug cartels or organized criminal activities. Therefore, at this stage, when the criminal trial of the appellants herein is still pending before a court of competent jurisdiction, even the balance of interests lies in favour of continued attachment of the subject properties. The same by itself does not disturb the ownership title of the appellants and does not deprive them of possession and enjoyment of the same.

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43. On facts, it is submitted that that an amount of Rs. 18.08 crore, was owed by the NC Hills Autonomous Council to the appellants for supply of bamboo in consequence of the arbitration award. The said arbitration award had been duly accepted by the Government of Assam. Out of the said amount of Rs. 18.08 crore, an amount of Rs. 2.00 crore has been paid to them by the Council and the balance was still due. These facts have not been contested by the respondents. The contention of the appellants is that the amount of Rs. 5,49,00,000/- received by them from NHAI funds was treated by them as part of the compensation award. In this regard, as already noted, a prosecution complaint stands filed against the accused, including the present appellants in respect of the PMLA offence. Facts on record inter alia indicate that credit vouchers for depositing the amounts in the accounts of Dimasa and Enn Cee were filled up and deposited in the Bank by an employee of the appellants on their instructions. It is further mentioned that one Demand Draft dated 07.03.2008 issued by the Project Implementation

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Unit, NHAI, Silchar, was personally collected by an employee of the appellants and the same was deposited at Guwahati on the next date by the Dabiruz Jaman one of the main accused persons, himself. Be that as it may, the criminality or otherwise of the action of the appellants in appropriating the said amount of Rs. 5,49,00,000/- is yet to be established. However, the legal position is clear that the sweep of Section 5(1) is not limited to the accused named in the scheduled offence. It would apply to any person (not necessarily being accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime. It has been so held by the Hon‟ble Supreme Court in its landmark judgment in the case of Vijay Madanlal Choudhary, Special Leave Petition (Criminal) No. 4634 of 2014) . In the said case, it was further held by the Apex Court that the objective of enacting the Act was the attachment and confiscation of proceeds of crime which is the quintessence, so as to combat the evil of moneylaundering, by reaching the proceeds of crime in whosoever‟s name they are kept or by whosoever they are held. Therefore, so long as the source of the money is alleged to be „proceeds of crime‟ within the meaning of the Act, it can be attached by the respondents regardless of whether the appellants herein themselves stood charged of any scheduled offences or the prosecution complaint filed under the PMLA, 1999 or not. In the present case, as already noted, the appellants have been named in the prosecution case filed under the PMLA, 2002. However, even if they were not accused in the PMLA case, the properties could have been attached so long as there was evidence to indicate that alleged proceeds of crime traveled from one or more persons who are so accused.

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44. In light of the above discussion, the present appeals are hereby dismissed.

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45. Pending applications, if any, shall also stand disposed of.

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46. Nothing in this order shall be read as expression of opinion on the

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